Abstract
The study investigates the effects of foreign ownership of a domestic firm on the establishment of environmental policy under an oligopolistic market. We also compare two types of environmental policies: environmental standards and tax. We find that complete foreign ownership decreases welfare under both environmental regulations. In addition, the equilibrium environmental standards become more severe and environmental tax rates decrease as the number of domestic firms, which are solely owned by domestic investors, increases. Furthermore, if there are more than two domestic firms, the combination of foreign ownership restrictions and a lax environmental tax increases welfare.
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